It is proposed that the CDK7-cyclin H complex functions in cell cycle progression, basal transcription and DNA repair. Here we report that in vitro reconstitution of an active CDK7-cyclin H complex requires stoichiometric amounts of a novel 36 kDa assembly factor termed MAT1 (ménage à trois 1). Sequencing of MAT1 reveals a putative zinc binding motif (a C3HC4 RING finger) in the N-terminus; however, this domain is not required for ternary complex formation with CDK7-cyclin H. MAT1 is associated with nuclear CDK7-cyclin H at all stages of the cell cycle in vivo. Ternary complexes of CDK7, cyclin H and MAT1 display kinase activity towards substrates mimicking both the T-loop in CDKs and the C-terminal domain of RNA polymerase II, regardless of whether they are immunoprecipitated from HeLa cells or reconstituted in a reticulocyte lysate. MAT1 constitutes the first example of an assembly factor that appears to be essential for the formation of an active CDK-cyclin complex.